1.C 2. A 3. C 4. D 5. C 6. C 7. B 8. A 9. B 10.

C
11. D 12. D 13. C 14.B 15. C 16. B 17. D 18. B 19. B 20. D
21. C 22. D 23. B 24. C 25. A 26. A 27. A 28. C 29. A 30. B

STRATEGIC MANAGEMENT LECTURE 3 QUIZ

1. An industrial fabrication firm has purchased a facility capable of housing large-scale projects
—as long as 120 feet. The firm could develop this tangible resource into a capability by: A.
purchasing additional buildings of similar size across the country.
B. buying raw metals and shipping them to the facility.
C. employing engineers who can design large projects and welders who have expertise in these
projects.
D. selling the building to its customers for them to use for their projects.

2. A resource or capability can be classified as a core competency that can be a source for a
sustainable competitive advantage if:
A. it is different and better than the way a competitor is executing the same capability.
B. it is the same as the capabilities offered by competitors.
C. other companies use a different capability to accomplish the same goal.
D. it can be purchased through outsourcing.

3. A capability meets the criteria of being valuable when:

A. it requires an investment of half of the company's financial assets.
B. it is possessed by only the top tier of companies in the sector.
C. it helps a firm exploit opportunities in its external environment.
D. its causes and uses are unclear.

4. BlackBerry, a one-time leader in secure cell phones, lost its edge. Without significant
upgrades or innovation, the company quickly lost market share to iPhones and Android devices.
The company attempted to imitate these advances with the Blackberry Storm product, which
flopped. Blackberry was criticized as trying to leverage capabilities beyond its core
competencies. Which of the following tools should Blackberry use to regain a scope of its core
competencies and determine potential sources of competitive advantage?
A. External environmental analysis
B. Competitor analysis
C. Industry analysis
D. Value chain analysis

5. Which of the following is an intangible resource?

A. The formal reporting structure in a multinational corporation
B. A network of distribution centers throughout the nation
C. A firm's ability to come up with new and different ideas
D. A firm's capacity to borrow money to increase its production capacity

6. A software company that is seeking a sustained competitive advantage will constantly be

facing obsolescence because of environmental change. To generate a sustained competitive
advantage, this company must:
A. develop strategies to push competitors out of the business early so it is not faced with
technological pressures.
B. capture as much revenue as it can quickly, and then close the business when technology
surpasses it.
C. be continually building its technological capabilities to develop new skills as technology
advances so that it can offer constant upgrades to meet customers' needs.
D. always hire new people to bring new experience and knowledge into the firm.

7. A nonprofit organization is focused on providing mental health services to the homeless in its
geographic area. It serves people by ensuring they receive the public assistance they are eligible
for and then connects them with care providers that have expertise working with transient
patients. The company's primary expenses are the salary and benefits for its staff of social
workers, and it receives government funding to cover those. However, the organization does not
have enough people to fill its open positions and has a waiting list of homeless people in need of
case workers. Which of the following represents a weakness for the nonprofit organization?
A. Fundraising
B. Human resources
C. Distribution
D. Customer service

8. Which of the following is an example of an operations activity?

A. Developing employees' work schedules
B. Arranging for customers' payments for delivered goods
C. Developing and managing product brands
D. Fully complying with a product's warranty

9. In the process of conducting an internal analysis and making decisions, a manager faces the
challenge of uncertainty:
A. as a result of the interrelationships among the different conditions that shape the firm.
B. while gathering complete information about the characteristics of the firm's general and
industry environments and customers' needs.
C. if more than one manager is involved in making a particular decision.
D. when those affected by decisions disagree with the conclusions reached by the manager.

10. Which of the following statements about tangible resources is true?

A. Compared to intangible resources, tangible resources are a superior source of capabilities and,
subsequently, core competencies.
B. Firms prefer to rely on them rather than intangible resources as the foundation for their
capabilities.
C. The value of tangible resources is constrained because they are hard to leverage.
D. Intellectual capital is the most important tangible resource for today's leaders to develop.

11. The senior managers of a grocery store chain have a disagreement over the direction of the
company. One faction wants to leverage its capabilities and core competencies to take advantage
of the opportunities provided by a stronger online presence, including online ordering with both
at-store pickup and home delivery. The other faction feels that the company's strengths lie in
small, convenient neighborhood stores and the customer service that accompany an in-store
shopping experience. The online expansion would be a departure from what the company already
knows how to do and would require a significant investment. Those in favor of the changes feel
that the potential returns make the investment worthwhile. What concept are those in favor of
change struggling against?
A. A global mind-set
B. Tangible resources
C. Core capabilities
D. Core rigidity

12. Apple, a leader in mobile technology products, wasn't always focused on mobile technology.
In 2007, the company changed its name from Apple Computers to Apple Inc. This change was
indicative of a shift in the industry. Apple began introducing iPods, iPhones, iPads, iTunes, and
the App Store. Apple recognized its core competencies in hardware design and software
engineering should serve as the foundation of its future strategy. Which of the following tools
did Apple use to determine its competitive advantage?
A. External environmental analysis
B. Competitor analysis
C. Industry analysis
D. Internal analysis

13. A company has identified a core competency in providing telecommunications services for
mid-sized businesses through a combination of simple technology and software, excellent
customer service, and low-cost hardware. As competitors gain ground in competing for mid-
sized companies, this core competency might become a core rigidity if the:
A. company starts to target smaller businesses with its bundle of capabilities.
B. company chooses to shift its focus to large-scale enterprises to offer its products and services.
C. company doesn't keep up with advances in technology and customers begin to expect greater
value from the technology.
D. cost of hardware rises, thereby increasing the company's costs of production.

14. Which of the following is a value-generating activity?

A. A service the company provides to customers that they pay for
B. The core competencies that a company holds that make it possible for it to serve customers in
a different way from its competitors
C. A new machine that reduces energy costs within a company
D. A customer promotion or sale

15. A hospital system operates 22 physicians' offices, five skilled nursing facilities, and two
hospitals. The system employs more than 500 people directly and is affiliated with more than
100 additional physicians. The system offers a wide breadth of medical services, including all of
the major specialties. The system was recently recognized as the top cardiac hospital in the state.
Which of the following represents the company's capabilities?
A. The hospital buildings and facilities
B. The staff of 500 people
C. Its complete list of medical services
D. Its cardiac services

16. Outsourcing is the:

A. decision to manufacture in a foreign country, at a facility owned by the company, because it
offers lower wages.
B. purchase of a value-creating activity or a support function activity from an external supplier.
C. decision to pay less for a value-creating activity through a supplier.
D. decision by a company to purchase a supplier's company, bringing its capabilities into the
company.

17. If a U.S.-based automobile parts supplier were to apply a global mind-set to its internal
analysis, it would:
A. review sales data of its North American dealerships to determine its most popular vehicles.
B. research the history of the invention of the car and the evolution of the automobile industry.
C. find information about the transportation infrastructure in emerging automobile markets
around the world, including Asia and Africa.
D. study all of its internal resources with an understanding of which capabilities offer value to
meet the needs of U.S., Japanese, European, and Korean automakers.

18. TaylorTech, a high-quality metals finishing company, is struggling with its margins.
TaylorTech has raw materials delivered to its foundry in Pittsburgh, where the company melts
the metals into castings. The firm then polishes them as a value-added process before selling the
custom castings to customers. Its unique polishing process is rare in the United States, is very
secretive, and results in a more efficient cast that commands a premium price. Unfortunately, the
casting process is becoming more expensive because of increased wage pressure from the
workers specializing in casting. With these issues, TaylorTech has to make a decision. Which of
the following is the most viable option for TaylorTech to increase its margins?
A. Lay off team members across the company
B. Outsource the casting process
C. Stop offering the polishing process
D. Hire less-skilled workers

19. Which of the following capabilities meets the criteria for being a core competency, in that it
is rare, valuable, costly to imitate, and nonsubstitutable?
A. The human resources function
B. A company's history and brand
C. A manufacturing facility
D. The CEO

20. Capabilities develop into core competencies that can serve as the source of competitive
advantage when:
A. a company invests a lot of financial capital into them.
B. a firm copies the way other firms perform them.
C. the leadership team chooses to highlight them as part of the company's core values.
D. employees, or human capital, integrate them and deploy them to deliver value to customers.

21. A sporting goods company developed an innovative material for the manufacture of baseball
bats. For many years, the material and its process for manufacturing served as a rare and valuable
capability, distinguishing it from competitors. Unfortunately, many of the baseball leagues have
been changing their regulations to outlaw bats made of this material because they constitute an
unfair advantage for players. As part of its internal analysis, its leaders might:
A. examine the trends in the industry to see what materials competitors are using in their bat
manufacturing.
B. lobby the sports leagues to ask them not to outlaw the bat material.
C. determine if the company's core competency is in research and development of different
materials or only in working with this material specifically.
D. research other kinds of materials to find one that is not outlawed but that could be produced at
a lower cost.

22. A firm should analyze its internal organization as part of the strategic management process
because:
A. the firm is required to report its results to the government.
B. it is the only method for identifying threats and opportunities to the business.
C. without this study, strategic leaders do not have a working understanding of how their
business operates.
D. it provides the insights the firm requires to match what the firm can do with what the firm
might do when formulating strategies.

23. An attorney has grown his law firm, gaining new clients in two diverse areas—estate law and
immigration law. He's not sure which specialty will become his focus in the long run. At the
same time, he believes he has enough work to support hiring a paralegal. However, he is having
trouble hiring a paralegal who can manage both types of clients. He was able to find a freelance
paralegal referral service that connects attorneys to paralegals who have experience in a variety
of specialties. He might consider outsourcing through the referral service because:
A. it is less expensive than hiring a full-time paralegal.
B. it provides him with the flexibility to gain capabilities to serve both types of clients without
making a long-term investment.
C. outsourced capabilities provide greater value to customers and are superior to internal
capabilities.
D. he has a friend that works for the paralegal referral business, and she will earn a bonus if he
uses the service

24. Capabilities are the:

A. advanced degrees that are held by members of the senior leadership team.
B. physical attributes of the company, including its buildings, machinery, and other assets.
C. combination of tangible and intangible resources used to complete the organizational tasks
required to produce, distribute, and service the goods or services the firm provides to customers.
D. human capital, through knowledge and experience, applied to producing products.

25. A core rigidity arises when a:

A. core competency generates inertia and stifles innovation, often because of conditions in the
external environment.
B. corporation refuses to change its strategies without an action by the board of directors.
C. company puts all of its strategic decisions up for a vote by the company employees.
D. firm is led by a CEO with a rigid sense of mission that cannot be swayed.
26. Value is measured by:
A. a product's performance characteristics and by its attributes for which customers are willing to
pay.
B. the price of a product or service set by the manufacturer to be sold in a retail environment.
C. the inputs required to produce a product or service, including human, physical, and financial
capital.
D. the amount of investment required to achieve a competitive advantage.

27. A company is analyzing its value chain to discover its value-creating activities. While
formulating its strategy, the firm will:
A. consider the value chain activities and support functions to determine which activities
contribute the greatest value in the product or service being sold to customers.
B. create functional departments to manage these activities.
C. expand into multiple markets to serve as many customers as possible with its value-creating
activities.
D. prioritize only its support functions as a source of competitive advantage.

28. Myspace, the social networking site, was a leader and innovator for modern social
networking. However, not long after Myspace's peak, a new social networking site, Facebook,
began gaining ground. Myspace quickly became obsolete because of Facebook's superior
functionality, design, and features. Which of the following was Myspace lacking that resulted in
the company losing its competitive advantage?
A. A mission statement because the company lacked a clear understanding of where it was
operating and who it was serving
B. Valuable capabilities because Myspace didn't exploit the opportunity of people's need to
connect
C. Costly-to-imitate capabilities because it became less expensive to start a social networking
site
D. Intangible resources

29. A company owns a patent, with six more years of protection, on a prescription medication
that is used by people around the world. This resource is:
A. rare and valuable.
B. nonsubstitutable and valuable.
C. costly to imitate and nonsubstitutable.
D. an example of outsourcing.

30. A capability is considered rare when:

A. it helps a firm to neutralize any threats against it.
B. it is possessed by few, if any, other firms.
C. its cause is ambiguous.
D. it has no strategic equivalents.